The euro had a big rally this week amid risk appetite, caused by comments of central banks. The rally followed two consecutive weeks of losses. Yet there are no guarantees that the currency will be able to keep its gains.
The monetary policy decision of the European Central Bank was the major bullish factor for the shared 17-nation currency. ECB President Mario Draghi did not say anything new, but at least he reassured that the bank is prepared to act, specifically to start buying bonds of indebted nations. The minutes of Federal Reserve’s meeting reinforced the positive mood of Forex traders.
Yet speculators cannot but question whether the gains are sustainable. The situation in Europe is far from improving. Spain still did not ask for a bailout and Greece is still a major source of uncertainty. Furthermore, the positive US employment report had mixed impact on the FX market as initial optimism was trimmed by speculations that the Fed may drop its accommodative policy sooner as unemployment falls.
EUR/USD advanced from 1.2843 to 1.3027. EUR/JPY climbed from 100.12 to 102.45, reaching the highest level in more than two weeks. EUR/GBP surged from 0.7952 to 0.8074.
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